Livemint, November 23, 2015. Geneva – The US and Switzerland have agreed not to introduce a controversial norm in the global patent law regime for pharmaceutical products for another two years until end-2017 at the World Trade Organization (WTO), according to negotiators familiar with the development.

The decision came as part of a compromise struck on Wednesday between the two nations, home to several pharmaceutical giants, on the one hand, and emerging economies Brazil, China, Egypt, India, Peru and Russia on the other.

The norm which the US and Switzerland threatened to bring into the WTO’s Trade-related Intellectual Properties (TRIPS) Agreement is called a non-violation complaint, or NVC, which enables a government to raise a dispute even when an agreement has not been violated.

At present, NVCs can only be invoked for disputes in the trade in goods and services. It does not apply to the TRIPS agreement because of an existing moratorium.

The US and Switzerland have long threatened to use NVCs on behalf of their pharma companies against countries like India, a major producer of generic drugs, but are said to have backed down amid mounting criticism by international non-governmental organizations.

The moratorium on NVCs’ applicability to the TRIPS provisions would have ended at a meeting of trade ministers in Nairobi next month if the US and Switzerland had persisted with their threat not to join the consensus for extending it.

US and Swiss pharmaceutical firms like Pfizer Inc., Merck and Co., Eli Lilly and Co., Bristol-Meyers Squibb Co., Norvartis AG, and Roche Holding AG are up in arms against provisions in the amended Indian Patent Act, claiming they change the patentability requirements and deny market access for their products.

Despite securing stringent patent provisions for pharmaceutical products in Trans-Pacific Partnership Agreements, particularly on data protection norms, the US was unable to move against India at the WTO because of the inapplicability of NVC to the TRIPS agreement.

The US also came under massive opposition from over 100 countries led by Peru in which India, China, and Brazil played an important role.

Even so, the US and Switzerland could have easily secured the change to apply NVCs to the TRIPS Agreement at the Nairobi ministerial meeting if they had chosen not to join the consensus to extend the existing moratorium. “If there is no consensus on the continuation of moratorium (at the Nairobi meeting) then NVCs will automatically apply,” the US had said at the last TRIPS Council meeting last month.

In an attempt to counter the stand of the US and Switzerland, developing countries led by Peru tabled a proposal calling for permanent inapplicability of the NVCs to the TRIPS agreement.

The US could have killed that move, too, by blocking consensus, according to TRIPS negotiators.

However, Washington chose to opt for a compromise following growing criticism from health pressure groups such as Medicins Sans Frontieres (MSF) and Oxfam, said a South American trade negotiator who asked not to be named. “The extension of moratorium for another two years is acceptable to us,” the negotiator said, asking not be to quoted.

Meanwhile, on a separate moratorium for not levying customs duties on electronic transmissions, the US, along with other industrialized countries, almost secured another extension for two years.

But the US and Chile, which were supported by other industrialized and some developing countries, failed to secure a green signal for their comprehensive e-commerce work programme, including cloud computing, because of intense opposition from India and a majority of developing countries.

Many developing countries supported India’s proposal on Wednesday that called for renewing and reaffirming the current work programme and institutional arrangement for e-commerce. It says “(the examination of issues under the (current) work programme (on e-commerce) is not yet complete. We agree to continue to substantially reinvigorate that work, including examination of all trade related issues relating to global electronic commerce, taking into account the economic, financial and development needs of developing countries. We agree to maintain the current institutional arrangements for the work programme.”

Last week, Chile has circulated a proposal to expand the work programme along with an extension of the waiver for not imposing customs duties on electronic transmissions until 2017.

Chile’s proposal on e-commerce, which was supported by the US, sought to “examine the trade-related aspects of digital technologies with a special focus on their role for, inter alia; benefiting traditional industries; supporting the growth and export potential of persons, small and medium-sized enterprises, including small producers and suppliers; and their relation to the increased service content of trade in nearly all economies.”

At the meeting on e-commerce on Wednesday, the US praised the Chilean proposal, saying that it can be the basis for continuing the work programme on e-commerce.

But India severely criticized the Chilean proposal on the grounds that it raised new issues while expanding the mandate without completing the current work programme.

South Africa, Turkey, Brazil and Egypt, who are the co-sponsors of the Indian proposal, maintained that there is no need to change the current work programme on e-commerce. China, Cuba, Ecuador, and coordinators of the Africa Group, the Arab Group, and the least-developed countries also supported the Indian proposal.

The US disagreed with India over its assessment of the Chilean proposal, arguing that it offered a way forward to address several issues in e-commerce, according to a participant familiar with the meeting.

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